Comparing Costs
Although banner ads are not sold on a cost-per-click basis, you can always calculate your actual cost per click. For example, if you are advertising on a particular site for a $20 CPM, and have been getting an average clickthrough ratio of 0.5%, then your cost per click would be $4.00 ($20 divided by 5 clickthroughs). If another site delivers a similar click rate, but charges a lower CPM, it may be a better buy. Then again, it may not - the "quality" of clickthroughs is also a factor, as we shall discuss below.
Another figure that can be useful is the cost per unique visitor. As mentioned above, the number of pages that the average visitor sees varies from site to site. Ad agencies that are on the ball will get this information from each site, and use it in planning.
For example, say a particular site has an average of 5 page views per visitor. If their average number of impressions per month is 500,000, then their average user sessions per month would be 100,000. If the main goal of a campaign is clickthrough, then the cost per visitor should not be greater than the CPM. On this particular site, you would buy no more than 100,000 impressions per month.
If, however, brand recognition is a major goal, then the situation is different. When you're trying to hammer a brand name into people's heads, you want them to see your banner over and over. If this is the case, then a low cost per visitor would not be as important as a low cost per impression.
For sites that sell products or services, there is another very important bit of data, called the "conversion rate". This refers to the percentage of site visitors who actually buy someting. It may seem to have nothing to do with banners, but it does, as we'll see in the next section.
